EU proposes lifting diesel taxes to avoid 'tank tourism'

(STRASBOURG) - The European Commission tabled proposals on Tuesday to lift minimum diesel taxes to discourage hauliers from tanking up in EU countries with the lowest rates.

The European Union's executive arm said studies had found that hauliers drove "millions of extra kilometres" to fill up their tanks in countries with the lowest taxes, harming the environment and distorting competition.

Since 2004, the minimum excise duty allowed in the EU is 302 euros (399 dollars) per 1,000 litres, and this is supposed to rise to 330 euros in 2010.

Under the commission's proposal, minimum tax would be raised to 380 euros per 1,000 litres in two steps.

"I am firmly convinced that European haulage markets, now fully opened to competition, can no longer afford the excessive differentials in excise duties applied to gas oil," said EU Tax Commissioner Laszlo Kovacs.

"These create significant distortions of competition among companies competing on the same markets and threatens jobs," he added.

Currently, nine EU states, mainly new members in Eastern Europe, have a special derogation to charge rates between 220 and 294 euros during a transition period.

Five other member states have rates over 400 euros while Britain charges a tax of 693 euros.

Like all matters of tax harmonisation in the EU, the proposal requires backing from all 27 member states to go into effect. A similar proposal put forward in 2005 failed.

EU excise duties on commercial diesel – Frequently Asked Questions